Steel cos to surrender units to Odisha CM Naveen Patnaik to protest the government’s apathy in addressing surging production costs

Promoters of about 200 mid-sized and small scale steel units in Odisha have decided to surrender their units to chief minister Naveen Patnaik to protest the government's apathy in addressing surging production costs and unavailability of iron ore.

The move by the steel firms - a first in Indian steel industry - will see about 3 million tonnes of steel and sponge iron products come off the steel market, compounding the shortage already caused by the suspension of mining in Karnataka. 

The promoters will also appraise their labour union leaders of the situation and the companies' inability to pay them salaries. 

"The promoters of steel industry have been approaching the Odisha government to make available adequate quantity of raw materials at reasonable prices to save industries from closure. However the negativity in the government is forcing industries to down their shutters one by one," said B P Modi, deputy managing director of Visa Steel. "There is a huge price mismatch between prices of iron ore and finished steel," said Rathi Steel and Power CEO Udit Rathi. "The current prices of ore are even higher than peak prices in 2008, whereas steel prices are lower by 25-30% from peak levels. 

It is impossible for the industry to absorb this kind of a price disparity. It is time the government regulates prices of iron ore, which is a natural resource and which should benefit the nation, rather than benefit few selected mine owners," he said. Odisha is the largest producer of sponge iron in the country employing more than 40,000 people and contributes Rs 1,100 crore annually to the state exchequer. The Orissa sponge iron sector exists in six clusters - Sambalpur, Jharsuguda, Rourkela, Angul, Jajpur and Keonjhar. 

Currently, about 104 DRI units are in operation in the state with an enhanced installed capacity of 11.5 million tonnes. The promoters will meet at Bhubaneshwar on Monday and try to meet chief minister Naveen Patnaik, Rajya Sabha member Pyari Mohan Mohapatra and chief secretary BK Patnaik to seek their intervention in the matter. "It has become impossible for us to run the units anymore, so we would be voluntarily surrendering the factories to the CM for his appropriate decisions," All Odisha Steel Federation President PL Kandoi said.

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